IT was two hours into the closing of my new Brooklyn Heights condo last Thursday when I realized the numbers didn’t add up. Specifically, the number the attorney for the bank handling my mortgage came up with didn’t match the actual money I was spending to close. First, it was off by just $600, then it was off by even more.
The bank’s attorney just sort of shrugged and said, “If I’m within $10,000, that’s pretty good.”
I guess he was joking, but nobody in the room laughed.
“I want to live in that math world where you just estimate things,” I coolly replied.
After a few minutes of confusion, we got the numbers to match. The recording fee and an attorney fee on my second loan had not been factored in properly. Mystery solved. And I was actually going to get some money back!
Overall, my closing was a pleasant process, but that was because I anticipated the financial pain the day would bring.
Here’s what you should know to make closing – and moving in – as smooth as possible.
GET YOUR PEN AND CHECKBOOK READY – AND THEN SOME
Buyers are often told that closing costs will be equivalent to about 3 percent to 5 percent of their home’s purchase price. But if you’re buying new construction (which means big transfer taxes) like I did, be prepared to spend more: 6 percent is probably a good amount to sock away, and that, of course, is in addition to moving expenses, furnishings and incidentals. This is an important factor to consider when you figure out what kind of home you can actually afford.
You’ll obviously need to have your checkbook at the closing, but also make sure you’ll have time the day before or the day of your closing to get the bank checks required for many of your closing costs.
This, of course, means that funds need to be available by your closing date. So, if you’re moving cash from other bank accounts or taking money out of your IRA, make sure that any transfers are done well in advance.
ASK QUESTIONS
If you don’t recognize a charge on a document, speak up. You have every right to know what you’re paying for.
I noticed a $250 legal fee for “review of second loan documents,” even though I previously had been told I was being charged a flat fee for legal services. I inquired about it and got the fee removed along with a prompt apology.
The same goes for your mortgage broker – if he or she promises you that there will be no closing costs on your loan, and you see a charge you don’t understand, bring it up immediately. In my case, my mortgage broker was true to his word and is refunding me a $150 recording fee on my second loan.
DO A THOROUGH WALK-THROUGH
You’re allowed multiple walk-throughs before you close, to make sure everything in your home is in working order. About a week before closing, I did my first walk-through with my broker and made a punch list of things that needed to be repaired, including a clogged showerhead and a leaky bathroom sink. The developer promptly fixed everything before my closing. After a second walk-through, I was content that everything was fine – and was reassured by the fact that the developer would fix any major problems I might discover later.
I went to the closing with no punch list, but after moving in, I realized that my dishwasher didn’t work.
It had started properly during the initial walkthrough, but I hadn’t actually waited around long enough to notice that the water wasn’t hooked up correctly. This was easily repaired, but it took a day for the building’s busy superintendent to show up. And at first, he was leery about working on something that might invalidate my warranty. In the end, it was just a matter of turning a valve.
Lesson: It’s worth taking the time to thoroughly check out your apartment before you move in.
If your apartment has a washer/dryer, do a small load of laundry. If there’s a dishwasher, bring a couple plates and make sure they actually get washed. Fill up your bathtub and then drain it. Check all your sinks. It might seem time-consuming, but it’s much better than discovering and dealing with problems after you’ve moved in.
ADD IT UP
My closing started at 2 p.m. At 3:08 p.m., after I had gone over the deed and my mortgage papers, my attorney turned to me and said: “You’ve already signed the two important documents. Everything after that is, ‘Let’s just kill some trees.'”
I then signed multiple forms from the bank asking for nothing more than my Social Security number, which the bank already had weeks ago.
Then my attorney realized that the title agency we were working with had miscalculated a tax charge, and I might get more than $1,000 back. After a few minutes of recalculating, we realized that this would work out in my favor.
Here’s my notes about this.
3:43 p.m.: We get money back!
3:45 p.m.: Wait, do we?
3:46 p.m.: Yes!
It’s a bit surreal, seeing people with old-school calculators determining your financial fate on one of the most important days of your life. This is clearly one area where math hasn’t been taken over by computers.
Of course, I was a bit put off by the fact that I would have to wait for my money to be refunded. It would come in the mail, I was told.
I protested a bit: “I have my checkbook here to make adjustments. Why doesn’t anybody else have theirs to adjust me?” My lawyer: “But you get an apartment!” I guess that’s something.
DON’T JUST ROLL WITH IT
I decided it was OK to wait for my money, but I shouldn’t have let everything go. I noticed that the keys for the condo that I now own said “duplication prohibited” on them. I thought about asking whether that would be a problem later, but I decided I would rather just leave.
Two days later, I found myself screaming at the employees at two hardware stores. Neither would copy my key and both told me that I needed to get a note from my superintendent saying that this was my key. Never mind that this seemed like an easy letter to forge and that there was no easy way to prove that any specific key corresponded with any specific document.
I went back to my apartment, where the building staff (not the superintendent, whom I did not track down) told me to just go to another hardware store or put a piece of tape on the key. This, of course, didn’t work.
While this is just a small annoyance, it’s still an annoyance – one of many minor ones that come with buying a place. For me, it’s all outweighed by how much I love my new home. But I’ve learned my lesson, too. Next time, I’ll ask about the keys.